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Obsidian Energy Ltd T.OBE

Alternate Symbol(s):  OBE

Obsidian Energy Ltd. is a Canada-based exploration and production company. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. It has a portfolio of assets producing around 35,700 barrels of oil equivalent (boe) per day. Its operating areas include Cardium, Peace River and Viking areas of Alberta. Its Cardium asset is a fully delineated and de-risked asset. It is focused on manufacturing repeatable low-decline and high-netback light-oil wells across its Cardium land base. The Viking is a light oil, horizontal development play located in central Alberta. Its operations are focused on the Esther area. Peace River is a stable, cold-flow, base production asset. It operates on a contiguous and an acreage within the heart of the Peace River Oilsands region.


TSX:OBE - Post by User

Comment by masfortunaon Jan 10, 2023 10:42am
224 Views
Post# 35213302

RE:Good set up for 2023

RE:Good set up for 2023
JohnJBond wrote:

The general view of 2023 is that oil prices get expensive in the second half

How expensive?    Doesn't matter $100+

The reasons are simple - global recovery from Covid economic disruption - ie return of Chinese demand plus others that don't need to be discussed here

How does OBE position itself to gain maximum share value?

Maximize production available for sale in 2023 H2

How do they do that?

Spend as much as they can drilling in Q1/23.    Ie spend as much on Capex in Q1/23 as they did in Q1/22 and Q4/23.   That being about $100 million 

This seems to be exactly what that are doing right now in Q1/23

Q2/23 is break up.     About the only wells they can drill in Q2 are Viking.    Chances are they will double up what they did last Q2 and spend about $20 million on Viking drillling.     Putting total Q2/23 capex around $50 million

That sets them up to enter the second half of this year with the highest possible production at the time of highest oil prices 

Q2/23 is the cash cow quarter.   Cash tends to pile up because of the prior months of drilling and relatively low cap ex

We don't know what oil prices will average in Q1 and Q2.    But even at current prices they should still have sufficient free cash flow in H1/23 to achieve their $225 debt target and buy back 10% of their shares 

After that free cash flow will likely be divided between dividends and internal purposes.   Somewhere between 50/50 and 75/25 (the latter seems to be the comparable norm)

That looks like a winning strategy to me

You can crunch your own numbers to see what the free cash flow looks like in H2/23 with 37-38,000 boe/day and $100, $110, $120, $130, $140, $150 etc WTI 

At the higher end the annualized dividend could exceed the current share price.   

Merry Christmas (2023)


  Ok thx.  Have you crunched the numbers with oil at $70. $60, $50??? I do believe the sp will be significantly higher in 2023 BUT so far over the last 6 months , it has been a disaster for energy stocks. Here's hoping you are right ;)
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